Imperial Petroleum Chief Charged With Fraud Over Biofuels

By Margaret Cronin Fisk -
Sep 18, 2013

Imperial Petroleum Inc. (IPMN) Chief
Executive Officer Jeffrey Wilson was charged with failing to
disclose to investors that the company and a predecessor falsely
represented they were producing renewable fuel from raw
agricultural products.

Imperial Petroleum bought the predecessor, Middletown,
Indiana-based E-Biofuels, in 2010. The former owners of E-Biofuels, Craig and Chad Ducey, were separately charged with
fraud. Both indictments were filed yesterday by federal
prosecutors and unsealed today in Indianapolis.

The U.S. claims that E-Biofuels misrepresented its products
to gain government incentives for renewable fuel and Wilson
continued the practice after the purchase, misleading investors.
The U.S. Justice Department said today that six individuals and
three companies were indicted on counts including conspiracy,
wire fraud, false tax claims, obstruction of justice, money
laundering and securities fraud.

“Congress enacted incentives for the production of
biofuels to make the United States stronger and more energy
dependent,” said Robert G. Dreher, acting assistant attorney
general for the Justice Department’s Environmental and Natural
Resources Division. “Fraud by parties claiming such incentives
threatens these important public policies,” he said in a
statement today.

The U.S. Securities and Exchange Commission, in a lawsuit
filed today, accused Imperial Petroleum, Wilson and the Duceys
of securities fraud.

‘Lied to Investors’

“Imperial Petroleum and its executives outright lied to
investors about how their company turned a profit,” Robert Burson, associate director of the SEC’s Chicago regional office,
said today in a statement. “When their illegal scheme
collapsed, investors paid the price.”

Imperial’s stock price fell to less than 10 cents a share
after it was revealed that the company wasn’t producing
biodiesel fuel from raw materials, resulting in a market loss of
about $60 million, the SEC said.

Wilson entered a plea of not guilty in court today, his
attorney, Thomas Farlow, said in a phone interview.

“We deny the government’s allegations and we expect to be
exonerated,” Farlow said.

The criminal cases are U.S. v. Wilson, 13-cr-00190, and
U.S. v. Ducey, 13-cr-00189, U.S. District Court, Southern
District of Indiana (Indianapolis). The civil case is U.S.
Securities and Exchange Commission v. Imperial Petroleum Inc.,
13-cv-01489, U.S. District Court, Southern District of Indiana
(Indianapolis).